In it, but not of it. TPM DC
A group of Republicans on Capitol Hill is calling on Buffett to release his tax return to the public, to prove whether or not he actually pays a lower percentage in tax than his secretary. Buffett made no secret of the numbers to Rose, and explained how the income breakdown works.
From the transcript, posted by CNBC last month:
BUFFETT: ...I've got my tax return here.
ROSE: We'll take look at them in a moment.
BUFFETT: And -- and they -- they get -- I get taxed on up to $100,000. And -- and -- and my super rich friends get taxed up to $100,000. And that tax hits the people in my office very, very hard. Often they have a spouse working, so they get taxed on up to $200,000 that payroll tax. And that's at -- this year we've had a waiver of two points but that's normally at 15.3 percent. That alone is higher than the tax rate on capital gains or dividends.
ROSE: You point out that the average tax rate for people in your audience -- in your -- the average rate for people in your office is 36 percent of taxable income.
BUFFETT: Yes, 36 percent. And nobody's below 33 percent. And incidentally, the lowest income person in the office is higher than the 33 percent. They don't have the low rate. So from 33 percent to 41 percent they range and they average 36 percent and I'm in there with a fat 17.4 percent I think it is.
ROSE: And why is that?
BUFFETT: Well, taxes -- if you make money with money, you get taxed very -- at very low rates; 15 percent dividends in capital gains. No payroll tax. If you make money with muscle or hard work or sweat of your brow, you get taxed at rates that move on up. And most of the people, the middle-class gets taxed at rates of either 15 percent or 25 percent on their income tax, but then they get really hit hard on the payroll tax and that's what brings the rates in our office up to an average of 36 percent if you leave me out.
Watch the video here: